The risk management is done at Bank Eurasia” OJSC in accordance with the Rules of Application of the Corporate Governance Standards at Banks and the Risk Management Standards of the Central Bank of Azerbaijan, the Basel Recommendations for the Management of Risks at Credit Institutions, the Rules of Risk Management at Banks, the Charter of the Bank as well as the Bank’s Strategic Plan. The other governing documents are the current laws, the Risk Management Policy of the Bank, the Methodology for the Risk Management, the Internal Regulations and last but not least, the pertaining Procedures. Working to profit and increasing the capital are the staple principles in the management of risks.

The risk management process consists in controlling and minimize risks by defining and assessing the risks inherent in the operations of the Bank as well keeping the risk accounting and determining the admissible risk limits.

Credit risk

The probability of a loss consequent to failure to comply with contractual conditions, untimely performance or non-performance by the Borrower of his/her/its obligations to the Bank. The minimization of a credit risk is a process that incorporates the borrower solvency checks, loan portfolio diversification, accumulation of reserves against a loan, taking out the insurance of collateral and loans to compensate for possible losses incurred through loans and debts of the equal status, also, the employment of a special decision-making procedure with regards to high-risk credits and the compliance with the requirements for elaboration of long-term loan settlement conditions and for the writing-off of liabilities.

Market risk

The probability of a loss consequent to an adverse change in market prices as well as in the financial and derivative instruments present in the trade portfolio of the Bank and in foreign currency rates/precious metal prices.

Currency risk

The probability of a loss consequent to adverse motions of the exchange rates of the foreign currencies of the open currency positions of the Bank. The currency risk is managed gradually, in the following sequence: identification of a risk – determination of the open currency position and the degree of the risk – quantitative assessment of the currency risk – setting the limits.

Interest rate risk

The probability of a loss consequent to adverse changes in interest rates on the assets, liabilities and off-balance-sheet instruments of the Bank. The GAP analysis is used to determine the Bank’s potential interest rate volume.

Operations risk

The probability of a loss consequent to fallacies and errors linked to the execution of internal business processes and operation of the data systems and technologies; also, one that emerges due to external events’ impacts and/or influence. The operations risks are managed through: allocation of authorities, business regulation, automation of banking technologies, loss accounting, creation of risk maps, assessing risks independently and controlling them, the monitoring of the main risk indications and improving the internal control systems.

Liquidity risk

The probability of a loss consequent to the Bank having failed to fulfill its financial obligations in entirety. Minimization of the liquidity risk is done through: cash flow forecasting, estimation of advance indicators, limits (the maximum quantitative liquidity gap and the other limits imposed subject to the internal documents of the Bank), planning of the action to restore liquidity in case of unforeseeable developments and the liquidity stress tests. The liquidity reserves are accumulated in order to manage the liquidity risks.